Why a Vermont Utility CEO Is Embracing Solar and Net Metering

While many utilities are producing slick commercials that devalue distributed solar, Vermont’s Green Mountain Power is completely embracing big and small solar with a giant Vermont bear hug. Representing 75 percent of Vermont’s utility customers, GMP recently worked with legislators to nearly quadruple the state’s net metering cap to 15 percent of peak load.

Even before that, GMP was one of the first utilities to support community solar, and it launched one of the first solar FiTs in the U.S. in 2009. And now it’s announced that it wants Rutland, VT to be the solar capital of New England with a goal of 10,000 kW (10 MW).

Given the Edison Electric Institute’s utility death spiral warning, you’d think GMP would be putting up barriers to expanding net metering and residential solar. Nope. In fact, GMP recently received Vote Solar’s 2014 Utility Solar Champion Award in March 2014 and was named Utility of the Year by SEPA in 2013.

To find out why GMP wasn’t afraid of ramping up distributed solar growth, I recently interviewed its CEO, Mary Powell, pictured, after she received the Vote Solar award on behalf of GMP.

My first question: Unlike other utilities, why is Green Mountain Power embracing solar?

Powell said that GMP understands other utility’s concerns, but that there are two key drivers for why GMP is whole heartedly embracing solar and accelerating adoption in Vermont.

The first driver is that GMP’s leadership team is made up of many people coming from very different industry backgrounds and different perspectives on running a business—not a regulated monopoly. With that business background, Powell says that GMPs leadership team is constantly trying to figure out what GMPs customers want and to create a value stream around those desires. Since around 2005, GMP recognized that their customers increasingly wanted more renewable energy options and to go solar, so instead of fighting it, they worked to help make that happen with solar incentives.

“It’s kind of like trying to design the future,” said Powell. “While we feel like we are evolving and we are trying to play with all the different value propositions we can provide customers, we were really clear that the best way to be a part of that renewable energy future is to be a fast adopter, not an organization that’s resisting the change that’s organically happening.”

All well and good, but what about GMP’s bottom line? Isn’t fast solar adoption going to eat away at GMP’s revenues, as most utilities fear?

Powell responded that GMP was confident that it can both encourage distributed solar and maintain a healthy financially strong utility. “Those are both really important goals. The challenge is for customers—and so too for the developers and utilities—to find that appropriate healthy business relationship and the regulatory means to identify and understand value streams in a DG world.”

Powell emphasizes that if you build a really valuable customer model, then there will be a value steam that comes back in the form of revenues.

“Our investor and our board of directors really like the direction we’re going, and I think they really see this disruptive world and they see it coming, whether or not we embrace it or we don’t. So, we feel like we have a much better shot at creating new and different value streams that come back into the regulated utility infrastructure if we embrace solar. It’s not just a protectionist strategy versus a non-aggressor strategy, but an assertive strategy that’s trying to be a part of the solution.”

As for net metering, Powell says it definitely has a role in Vermont, but she adds…. “Does that mean that we see a future where that structure will always stay the way it is? Maybe, maybe not. But what we do see right now is that it’s an effective way to accelerate value in solar and accelerate the adoption, and we’re very fortunate that we’re working very closely with regulators on how we can do this in a way where you don’t just rapidly disrupt existing utility models. If you do that, then it can have unfortunate unintended consequences for customers, as well.”

Powell likens solar’s disruption to how cell phones disrupted traditional phone lines. The telecommunication companies that thrived were the ones that adapted and embraced cellphones, worked with regulators, and became the leading communication leaders rather than protecting their old business models.

Similarly, GMP is embracing not only solar, but the new technologies that complement solar, such as storage. They’ve already started an energy storage project in Rutland and are working with a Vermont based storage company about partnerships that can provide value to the utility and all stakeholders.

Storage is just one way Powell and GMP are thinking about changing the traditional utility business model. She also foresees more partnerships for not only storage and solar, but also for energy efficiency, on-bill financing, air source heat pumps, and integrating electric vehicles and smart grid technologies.

“It’s not just ‘go net metering, go solar,’” says Powell. “We’re kind of making sure we’re innovating at the same time and working with our regulators to try to create a very new and different model for how regulations could have value to customers. … Our dream is to embrace this disruptive future, but in a way where we’ve been smart enough to think of the things that you would actually pay us to do for you.”

Powell was also optimistic about GMP continuing to be a significant energy provider to customers, despite solar and other technology advancements. She predicted that even 15 years from now, the bulk of GMP customers will still want grid-tied power in the same way they have it today.

Asking for any constructive criticism of the solar industry, Powell is also positive, complimenting solar installers for working with GMP and regulators, as well as for cutting their installation prices as solar panels have come down instead of padding their profit margins. “I think that the more we can work together in the most collaborative ways possible, the more we’ll produce the best, most effective outcome for our customers.”

I finished up my conversation with Powell by asking her if she had any words of advice for her fellow utilities. As one of the smallest utilities in the United States, however, she was reluctant.

She said, “It’s very different when you’re very small and working in a small state, and you have better access to partnering, etc. But I think Jim Rogers, [the former chairman and CEO of Duke Energy] and others have stated it very well, which is that you can either be part of the solution or be part of the problem. So at its core, I think it’s beholden on us to try to figure out how to be part of the solution.”

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4 Comments

GMP is my power company. They are thinking properly about HOW to transition to a renewable energy future and still remain profitable. This is SMART! An excellent example of their "getting real" policy about reducing customer electric use (which avoids having to provide a higher minimum baseload and an increase in dirty fuel engine infrastructure investment) is their program to RENT efficient water heaters and Mini-Split Heating and Cooling Systems like the Mitsubishi MSZ-FE18NA/MUZ-FE18NA Mr. Slim H2i Wall Heat Pump Air Conditioner 18,000 BTU heating and cooling Super High Efficiency Mitsubishi ystem (M -Series). It consists of an outdoor unit, an inside air handler and a wireless remote control. This unit is pre-charged with the environment friendly R-410a refrigerant. No additional refrigerant is needed if the line set is 49 feet in length or shorter. It is rated at an incredible 20.2 SEER efficiency!

The customer rents the system for a price that, when added up to their new LOWER electric bill, is LESS than the total blll before getting rid of the fossil fuel furnace and the inefficient compressor air conditioners. PLUS, the total electricity demand for both base and peak goes DOWN for GMP while they make a profit renting mini-split heat pumps; A win for the customer, the utility AND THE BIOSPHERE! It's what I call ENERGY PRUDENCE!

Hi: I think that is great, but I don't particularly agree with the telcom analogy. Basically all the telcomes did is replace usage fees on hard lines with contract flat mobile fees, and gained revenue in the process. Replacing pay for energy with free energy, is not the same barrel of apples....

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